Cornell_Swap_Teach_In_9-21_v1

Reasoning to prevent abusive naked short selling

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• Reasoning: To prevent abusive naked short selling. • Advantages of Trading on Swap: Many large multi-strategy firms have global trading operations that make it too difficult to monitor inventory intra- day. They don’t know if they are a long seller or short seller to get a locate. Trading on swap alleviates them of the responsibility to monitor inventory intra-day. •Regulation: Circuit breaker prevents the execution of a short sale order of a covered security at a price that is less than or equal to the current national best bid if the price of that covered security decreases by 10% or more. • Reasoning: Meant to prevent short sellers from adding to the downward momentum when the asset is already experiencing declines and allow long sellers to sell first upon such a decline • Advantages of Trading on Swap: If DB holds long inventory, the transaction is marked a sell long vs. a short sale. Thus, you have the ability to sell based on Deutsche Bank’s long inventory. Past Present Future
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1 Global Equity Swap Indicative Rates Sample Long Swaps LIBOR + 40 Short Swaps Fed Funds Open - 30 U.S. Swaps Major Markets Longs LIBOR + 40 Major Market Shorts LIBOR - 40 International Swaps (Major Markets) International Swaps (Non Major Markets) Country Base Rate Long Swap (bps) Short Swap (bps) Argentina 1M LIBOR 160 -500 Brazil 1M LIBOR 100 -170 Chile 1M LIBOR 100 -320 Colombia 1M LIBOR 160 -520 Mexico 1M LIBOR 75 -130 Peru 1M LIBOR 125 -320 Bahrain 1M LIBOR 100 AS NEGOTIATED Eqypt 1M LIBOR 100 AS NEGOTIATED Jordan 1M LIBOR 100 AS NEGOTIATED Kuwait 1M LIBOR 100 AS NEGOTIATED Lebanon 1M LIBOR 100 AS NEGOTIATED Morocco 1M LIBOR 100 AS NEGOTIATED Oman 1M LIBOR 100 AS NEGOTIATED Qatar 1M LIBOR 100 AS NEGOTIATED Saudi Arabia 1M LIBOR 100 AS NEGOTIATED UAE- Dubai 1M LIBOR 100 AS NEGOTIATED Nigeria 1M LIBOR 175 AS NEGOTIATED South Africa 1M LIBOR 100 AS NEGOTIATED Country Base Rate Long Swap (bps) Short Swap (bps) Bulgaria 1M LIBOR 100 AS NEGOTIATED Croatia 1M LIBOR 100 AS NEGOTIATED Cyprus 1M LIBOR 100 AS NEGOTIATED Czech 1M LIBOR 85 AS NEGOTIATED Greece 1M LIBOR 85 AS NEGOTIATED Hungary 1M LIBOR 85 AS NEGOTIATED Iceland 1M LIBOR 100 AS NEGOTIATED Israel 1M LIBOR 100 AS NEGOTIATED Poland 1M LIBOR 85 AS NEGOTIATED Romania 1M LIBOR 110 AS NEGOTIATED Russia 1M LIBOR 150 AS NEGOTIATED Turkey 1M LIBOR 85 AS NEGOTIATED Ukraine 1M LIBOR 175 AS NEGOTIATED Hong Kong 1M LIBOR 60 AS NEGOTIATED China 1M LIBOR 100 AS NEGOTIATED India 1M LIBOR 70 AS NEGOTIATED Malaysia 1M LIBOR 70 AS NEGOTIATED Singapore 1M LIBOR 60 AS NEGOTIATED Taiwan 1M LIBOR 65 AS NEGOTIATED Vietnam 1M LIBOR 100 AS NEGOTIATED
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2 Other Asset Classes Bank loans: - Most clients gain leveraged exposure to loans via swap -Primary drivers: Term financing, operational and settlement efficiencies MLPs: -Foreign Investment in Real Property Tax (FIRPTA): Authorizes the US to tax foreign persons on dispositions of US real property interests. 1 1 IRS.gov
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2 Financing Options for Clients Prime Brokerage Portfolio Swaps Investment Strategy All All Transaction Term Extremely Flexible Extremely Flexible Client's Exposure to Security Actual
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